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Opinion | To Understand Elon Musk's Descent, Look at His $46 Billion Pay Package

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Opinion|To Understand Elon Musk's Descent, Look at His $46 Billion Pay Package


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Guest Essay

Credit...Illustration by The New York Times; photographs by picture alliance and kjohansen/Getty Images

By J. Bradford DeLong

Dr. DeLong teaches economic history at the University of California, Berkeley, and is the author of "Slouching Towards Utopia: An Economic History of the Twentieth Century."

This article has been updated to reflect news developments.

Elon Musk is not just another inconsequential Silicon Valley billionaire.

Most of his inconsequential peers have two primary accomplishments: showing up at the right place at the right time and being sufficiently arrogant to continue the course rather than diversify. Had their shoes been empty, someone else would have stepped into them, and things would have been much the same.

But Mr. Musk changed the world.

He wanted to jump-start the decarbonization of human civilization's energy. He succeeded. He drove Tesla to create the electric vehicle industry as we know it. Yes, he overpromised. But he often overdelivered and overdelivered spectacularly. Truly wonderful things happened with Tesla's performance as a technology inventor, deliverer and deployer.

But "happened" is in the past tense. Much has changed since 2018, the year Tesla dreamed up an unorthodox pay package that, in theory, tied Mr. Musk's pay to the company's performance. Problem is, the performance was not for making high-quality cars or making affordable cars or making cars at scale. The performance was for pushing Tesla's stock price up.

This pay package was, I think, bad for Mr. Musk. And it was, I am sure, bad for Tesla and, by extension, our nation's crucial fight against global warming, by far. On Thursday, Tesla shareholders reapproved this pay package, one that would hand Mr. Musk roughly $46 billion. I believe this pay package helped drive Mr. Musk's descent from visionary business leader to bizarre carnival barker. I wish that this set of incentives and responses hadn't just been validated.

Here I need to back up and tell you what meme stocks are. The standard example is GameStop, a company that runs about 4,000 video game and electronics stores. Trading at $5 a share at the start of December 2020, its price rose to a staggering roughly $150 a share at the end of January 2021. Mr. Musk joined the fun by tweeting one word — "Gamestonk!!" — and the shares soared to $483 two days later, before beginning a long, jagged decline. As of the start of 2024, it was almost $17 a share after a four-for-one stock split, far above the $5 of 2020, even though nothing much had changed about its (struggling) business. And a recent revival of GameStop mania has since pushed it up to $30 a share.

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